S&P falls 1.4% in safety flight on North Korea tensions

The Dow Jones industrial average fell 204.69 points to close at 21,844.01, with Goldman Sachs contributing the most losses.

Trump's threats have escalated since reports broke at the beginning of the week that North Korea had successfully produced a nuclear warhead that could fit inside its missiles.

Investors are losing enthusiasm for Canada's banking stocks as a slowdown in the country's housing market dents banks' growth prospects, with insurance companies seen as a better bet to benefit from higher interest rates.

Valeant's stock, which rallied a day before following quarterly results, sank 9.6 percent to C$17.85 after it said its subsidiaries in Australia were the subject of a tax audit. The move came after the International Energy Agency cut estimates for the amount of oil needed from OPEC this year and next, after lowering consumption forecasts for China and India. A U.S. Navy destroyer sailed within 12 nautical miles of an artificial island built up by China in a challenge to Beijing's territorial claims, officials told Reuters.

"The geopolitical tensions could be the catalyst for the market's direction in the next coming weeks depending on how it all shakes out", said Robert Pavlik, chief investment strategist at Boston Private, as quoted by CNBC.

The market indexes wavered between small gains and losses for much of the morning, then veered lower by afternoon.

Trump tells Guam Governor 'you are safe'
Mr Trump agreed that, "They should have had me in years ago ... frankly you could have said that for the last three presidents". The president called the United States military "incredible, "rock solid" and "the best in the world by a factor of five".

He has now gone further, saying the warning may not have been tough enough and that if North Korea did what it had threatened, it faced "an event the likes of which nobody's seen before". The CBOE Volatility Index (VIX) soared more than 40% to trade at 15.98. And Blue Apron shares dipped after its first earnings report as a public company.

On average, the S&P 500 falls 5% or more every 10 weeks and the index falls 10% every 33 weeks, according to data analyzed by AllianceBernstein going back to 1928. S&P 500 futures slipped 0.3 percent, after dropping the most since May yesterday, while the yield on 10-year Treasuries dropped below 2.2 percent.

Macy's dropped 4.2 percent as it reported second-quarter revenues fell 5.4 percent to $5.6 billion, another sign of the travails facing department stores. The consumer discretionary index was one of its biggest losers with a 0.47 percent drop.

The Canadian dollar was trading at 78.64 cents USA, down from an average price of 78.71 cents United States on Wednesday.

Analysts surveyed by Bloomberg say core inflation probably rose 0.2 percent in July. Core prices had been expected to rise by 0.2 percent.

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